Your vendor doesn’t accept credit cards — what now?

Jan 7, 2020

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Update: Some offers mentioned below are no longer available. View the current offers here – Capital One® Spark® Miles for Business, Capital One® Spark® Cash for Business 

For many small-business owners, many of their monthly expenses are payments to vendors. Even if those bills don’t fall in bonus categories for your credit card, paying with a flat-rate card can still earn you 2x rewards, which is better than not earning any rewards at all — and those points and miles will add up over time.

It has also become much more common for vendors to accept credit cards as a method of payment, but there are some suppliers that still don’t accept cards. Others may accept cards but tack on large processing fees. In these cases, what are your options?

(Photo by JGI/Jamie Grill/Getty Images)
Not every vendor accepts credit cards, but can you still find a way to earn rewards? (Photo by JGI/Jamie Grill/Getty Images)

American Express advertises a payment solution for vendors and there are some third-party companies that offer ways to use a credit card for online payments even at places that don’t normally accept cards. But will these work for your small business? And if so, are they worth it?

Vendor Pay by Amex

American Express advertises a payment solution, Vendor Pay, that facilitates the accounts-payable process for businesses with eligible Amex small-business or corporate-card accounts. The issuer has partnered with Bill.com to give cardholders the ability to automate their vendor payments using an Amex card.

Bill.com pays vendors with a virtual account number, letting you earn rewards on your payments when — and here’s the caveat — the vendor accepts credit cards. The basic plan that comes with your card membership can only be used by one member, but you can pay a fee for more advanced plans if needed.

When this feature was launched, it sounded like a great alternative for paying vendors who don’t accept credit cards. However, in order to use your Amex card though the Vendor Pay service, the vendor must accept cards. While you can use Bill.com’s wire transfer and other payment services in those instances, your Amex will not be charged and you will not earn rewards.

Woman in cafe shopping online with laptopPhoto by filadendron/Getty ImagesVendor Pay by Amex only earns rewards when the vendor accepts credit cards. (Photo by filadendron/Getty Images)

Plastiq

Plastiq is a third-party company that allows you to use a credit card to pay for bills. Both individuals and small businesses can use the service.

You provide Plastiq with the bill information and recipient details. Plastiq pays the vendor by check, wire transfer or ACH transfer. Your card is charged in return. Unfortunately, the service comes with a 2.5% fee, which would wipe out a considerable percentage — if not all — of any rewards earned by using a card.

Photo by Hero Images / Getty Images
Plastiq offers a way to pay bills with a card even when a vendor doesn’t accept it, but it comes with a fee. (Photo by Hero Images / Getty Images)

For many cardholders, that service fee will outweigh the benefits of using the service. However, if you need to be able to use a credit card because of cash flow, this is a viable option for vendors who do not accept cards or who charge an outrageous fee for card processing.

What cards should you use with vendors?

Some vendors may code under bonus categories that offer tiered rewards and make it especially worthwhile to use a card. However, many vendors won’t qualify for bonus earnings. In these cases, it’s best to use a flat-rate small business card.

The Capital One® Spark® Cash for Business and the Capital One® Spark® Miles for Business offer 2% cash back or at least 2x miles, respectively, on every purchase, no matter the spending category. With these cards also offering limited-time welcome offers that can potentially be worth more than $2,000, these are great options to use for bills. Some TPG readers, however, have reported issues connecting Spark cards to Plastiq.

For businesses with smaller budgets, the American Express Blue Business Cash™ Card is another option. You’ll earn 2% back on up to $50,000 in purchases each year. Unfortunately, this card does not come with an intro offer.

Bottom line

If you work with vendors who accept credit cards, paying those bills with the right business card can help you rack up rewards. However, there currently isn’t a perfect alternative if you work with a vendor that either doesn’t accept cards or charges a high processing fee.

It’s generally better to avoid the fees associated with the vendor or a third-party like Plastiq.

Featured image by Hero Images/Getty Images.

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